What’s the deal with retirement in America in 2025?

Picture of Cole Achtzehn

Cole Achtzehn

Marketing Manager at Confluent Asset Management

Americans are waiting longer to retire than we have seen in the past. This is due to a number of factors, such as increased costs of living requiring more savings, longer life expectancy meaning retirement lasts longer and requires more money, more flexible employment options leading to more “semi retirees” and many institutional factors like the rising age to access social security and the full slate of benefits along with it.

Between 2002-2007, 41% of adults aged 60-64 and 76% of adults aged 65-69 were retired. 

Between 2016-2022, 32% of adults 60-64 and 70% of adults 65-69 were retired, according to a 2022 Gallup survey.

In 2022,  the Pew Research Center found that 24% of non retired U.S. adults age 50 or older reported having either delayed their retirement or considering it because of the pandemic.

Average retirement savings broken down by age

According to data collected by the Federal Reserve in its 2022 Survey of Consumer Finances, here is the average amount of retirement savings based on age group:

35 and under
35 to 44
45 to 54
55 to 64
65 to 74
75 and above
$49,130
$141,520
$313,220
$537,560
$609,230
$462,410

Average retirement age

The average retirement age in the United States is 62, according to a 2024 MassMutual survey. This age is skewed by the population of people able to receive their full benefits at a younger age currently retiring and will likely continue to increase as younger generations approach retirement age due to that and other factors.

How much money do people need saved for retirement?

The only person that can fully determine how much is needed to retire is the retiree themself. Every person’s lifestyle, circumstances, desires, needs and plans are different, so as a result there is no formula. There are however some long used methods that help guide people in their retirement savings, each with their own pros and cons:

1. Save 10 to 12 times your annual income at retirement age. If you plan to retire at 67 and your income is $150,000 per year, then you should probably have between $1.5 and $1.8 million for retirement. This strategy can be useful for those with the ability to scale their savings later in life.

2. Use a multiple of your annual income at your current age as a guide. For example, at 30, have the equivalent of your current annual income saved. By age 40, have three times your current income saved for retirement. By retirement age, aim for that 10 to 12 times your income range. This strategy helps more clearly define and track retirement saving and accounts for changes in income more closely.

3. Save roughly enough to have 80% of your pre-retirement income. This amount is based on a safe withdrawal rate (SWR) of about 4% of your retirement accounts each year. This is to ensure you will have retirement income for approximately 25 years.

4. $1 million to $1.5 million. Having a net worth above $1 million still puts you in the upper percentage of Americans in terms of net worth. When combined with Social Security and any other benefits, it can offer sufficient savings to draw from. This strategy is by far the most basic and leaves the most room for external factors to throw a wrench in your plans.

How social security plays a part

Most people can start taking Social Security benefits at 62. Claiming Social Security at 62 means receiving significantly reduced benefits so it is usually not recommended unless the retiree needs it as additional income to an existing retirement plan.

Full retirement age which entitles you to 100% of your Social Security benefit varies by birth year, which means waiting until after your full retirement age to claim Social Security retirement benefits could net you an even bigger check. For anyone born after 1960, that age is now 67 years old.

There is also a growing fear that one day Social Security may cease or transform in the future, and therefore many advisors tend to suggest that reliance on these benefits should not be a cornerstone of retirement plans, especially for those of a younger generation.

Are people really "fully" retiring?

Instead of going straight from full-time work to dropping out entirely, some people choose to transition to fewer hours or take a less stressful or more fulfilling job, even if it pays less. This is known as “semi-retirement.”

According to a 2023 Pew Research Center survey, senior workers are the group who most enjoy working. Two-thirds of workers ages 65 and older said they were extremely or very satisfied with their job overall, a higher percentage than their younger counterparts.

The bottom line

Retirement is getting more expensive at the same time it is growing farther away for many people. Retirement is lasting longer for many people, but may be taking a new shape in the form of semi retirement. All in all, the landscape of retirement is changing. Now more than ever planning is important to ensure that retirement is secure and adequate. 

Looking for a retirement plan or strategy to boost your current plans? Check out our principal protection strategies today and embark on a whole new journey to achieving your goals.